Millions of households to save money under new plans to cap electricity meters

Energy watchdog wants to help the 'most vulnerable and least likely to switch' suppliers

By ROBERT FISK

3rd August 2016, 7:39 am

Updated: 3rd August 2016, 11:30 am

A PRICE cap is to be introduced on pre-payment meters in a move that will save more than four million customers around £75 a year.

The energy watchdog Ofgem has announced this cap will come in from next April.

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The pre-payment meter cap will help people save around £75 on their bills

Its response comes following a report published by the Competition and Markets Authority (CMA) in June - which set out ways in which the market could be improved for customers.

The regulator said that the CMA's report "points the way to a better future for consumers".

In an open letter, Ofgem said: "We expect suppliers to compete for all consumers by offering good value and innovative deals and providing good customer service.

"Ultimately, it is in suppliers' interests to make sure the CMA's reforms lead to lasting benefits for consumers."

The regulator added: "We will closely monitor how the energy market develops as these reforms are implemented, and will do so with a particular focus on consumer outcomes."

It said it would "not hesitate to take action" if it feels outcomes are "not as good as they could be".

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Energy watchdog Ofgem is bringing in the pre-payment meter cap to make life better for customers on the most expensive tariffs

One of the customers hopeful about the change is Ann Corrigan, from Manchester, who says the expensive tariffs on pre-payment meters can make it difficult to make ends meet.

She said pre-payment meters were already installed in her home when she moved in five years ago and did not mind at first but has found them to be increasingly expensive.

The 39-year-old NHS worker said: “It's a strain on your finances and it’s a struggle to make ends meet even though I do work.

“I just really feel for the elderly and people on benefits claiming job seekers or income support cause I’ve been there and I know how hard it is to make ends meet even before paying out for gas and electric.

“To think all this time we have been ripped off and been charged a higher tariff than normal paying billed customer is class discrimination and is totally unjustified.”

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Today Ofgem’s chief executive Dermot Nolan said it will work closely with suppliers to help "disengaged customers" who remain on expensive tariffs.

He said: "The CMA's final report is a watershed moment for industry and consumers and points the way to a fairer and more competitive future.

“I call on energy companies and consumer groups to seize this opportunity."

Next year the energy regulator said it will also pilot a database service - allowing rival suppliers to offer those on standard variable rates for three years or more better value deals.

A two-year investigation by the CMA found two-thirds of households were paying "over the odds" for their energy compared to those who have changed to a different tariff.

Ofgem

Ofgem boss Dermot Nolan says the watchdog will work with suppliers to help customers who are still on expensive tariffs

Alex Neill, director of policy and campaigns for consumer group Which?, said: "It's good to see Ofgem swiftly taking forward the CMA's recommendations to increase competition and reach people who are not engaged in the market.

"The regulator faces a huge challenge in implementing all of these recommendations in a way that stimulates competition to deliver better outcomes for many more consumers.

"For this to happen, the industry will need to commit to working with the regulator to ensure people get a fairer deal on their energy."

The Big Six currently supply energy to just under 90% of the domestic customers in the UK and generate about 70% of total electricity output in Great Britain.